What happens to Boeing affects the whole state
By DON BRUNELL
Port Orchard Independent Contributor
June 12, 2008 · Updated 4:03 PM
Many folks remember the 1972 Seattle billboard: Would the last person who leaves Seattle please turn out the lights?
The reference was to the massive job losses at Boeing when the supersonic transport project collapsed, and the company, then headquartered in Seattle, was on the ropes.
Much has changed since the days when people said, As goes Boeing, so goes Washington.
The company is now headquartered in Chicago, and our states job base has diversified with Microsoft, Costco and Starbucks joining Boeing as major economic drivers.
The recent news about Boeing has focused on the companys problems: The 15-month delay in the 787 Dreamliner project and its loss of a $35 billion Air Force tanker contract.
But there is good news.
The airline industry has bounced back from the 2001 nose dive and will need to replace its existing fleets with fuel efficient jets.
Some 26,000 commercial airplane orders are expected over the next 30 years, and Boeing has positioned itself to take advantage of that need.
Boeing is once again competing head-to-head with Airbus for commercial airplane orders, and the companys order book is healthy.
The 737 continues to be Boeings best seller, with more than 6,000 in service around the world. The company sold 2,150 of this aircraft from 2005-07 and, so far this year, has logged 261 orders.
Boeing is appealing the loss of the Air Force contract, and while that is being sorted out, the defense side of the business is moving forward.
The company converted its defunct 757 production line in Renton to assemble the P-8A Poseidon anti-submarine plane for the Navy.
Boeings initial contract calls for five test planes worth $3.4 billion.
Then there will be three more test aircraft before ramping up to full production by 2012, turning out 100 more. That will create jobs for 1,200 to 1,300 people in Renton and Seattle.
And there may be a silver lining in the 787 delay. The Everett Herald reports that some airlines are taking a second look at the Boeing 767.
So, while its profits are up for now, so are Boeings collective bargaining agreements with its two major unions.
The companys contract with the Inter-national Association of Machinists (IAM) expires on Sept. 3, and the Society of Professional Engineering Employees in Aerospace (SPEEA) contract is up Dec. 2. Company officials expect IAM to hold a strike-authorization vote in mid-July.
IAM represents 27,000 Boeing machinists, 25,000 of them in Washington. SPEEA bargains for 20,000 engineers and technical staff, most of whom work in Seattle, Renton and Everett.
The major issues are expected to be wages, health care and pension benefits. A prolonged strike would not only be a setback for Boeing but for our economy as well.
Hopefully, if there is a work stoppage, it would not be long and would not alter the work-flow progress that Boeing and its workers instituted to keep the company competitive.
Finally, there will be pressure in the Legislature next year to increase benefits, taxes and regulations all of which impact Boeings competitiveness.
As of now, lawmakers face a $2.5 billion revenue shortfall heading into the 2009 legislative session as well as union organizing legislation which would impact its suppliers.
Meanwhile, lurking on the horizon is China, a potential new Boeing and Airbus competitor. China expects to buy 2,230 new passenger airplanes between now and 2025.
But its government has fast-tracked development of its first commercial jet aircraft to compete with the Boeing 737 by 2020.
The ARJ-21s first test flight is scheduled for next year, and Chinas entry into aircraft manufacturing will trigger another sharp look at production costs for Boeing and Airbus.
So, Boeing is back, and the message on that famous billboard is a fading memory.
The question is, will Boeing continue to thrive and will its next generation of jets be assembled here?
Hopefully, union leaders and elected officials will recognize that all business, whether it is a multi-national giant like Boeing or Waynes corner market, need an opportunity to be competitive and to succeed.
If they are hampered or harnessed with heavy costs and regulations, they wont post a billboard announcing their move; they will simply go away.
Don Brunell is president of the Association of Washington Business.